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Confident TAG Oil commits C$27.4M to capex in 2017/18

Thursday 20 April 2017 09:49 AM

Confident TAG Oil commits C$27.4M to capex in 2017/18

By Pattrick Smellie

April 20 (BusinessDesk) - Vancouver-based onshore Taranaki oil and gas explorer and producer TAG Oil is forging ahead with capital expenditure of C$27.4 million of exploration, production and work-over projects, with another C$8.4 million available if farm-in partners emerge and oil prices rise.

The debt-free company says it's anticipating its "busy 2018 capital programme ... will not only satisfy the bulk of our commitments on our acreage, but also potentially contribute significantly to production and resource growth".

"TAG is planning at least five exploration wells during fiscal 2018 into a range of oil and gas targets," said chief executive Toby Pierce in a statement. "In addition, we have a range of work-over and re-completion opportunities in both Australia and New Zealand. Given the stronger Brent oil price curve, our clean balance sheet and early indications of positive farm-out interest, we are planning to exit fiscal 2018 with a significantly stronger platform to grow off going forward."

TAG plans to end the year with at least C$10 million in cash on hand.

The company has continued to invest despite the plunge in global oil prices that has seen offshore exploration and production decline at the expense of lower-cost onshore production, routinely using the rock-fracturing process known as fracking to release tightly trapped oil and gas deposits.

It estimates annual revenue from operations will be around C$28 million, with production averaging around 1,400 barrels of oil equivalent per day, rising to 1,900 boe/d by March next year, of which 75 percent will be oil, based on optimising existing in-field opportunities and existing production and if Brent crude oil prices average US$55 per barrel during the year. That represents a small and then increasing improvement on current average daily extraction of around 1,184 boe/d, according to the latest investor presentation on the TAG website for the Toronto Stock Exchange-listed company.

"An increase in oil prices could have a positive impact on this guidance, as well as success from any of the five planned exploration wells to be drilled in the next 12 months," said Pierce.

In the last 12 months, TAG shares have traded as high as 96 Canadian cents in early September and as low as 54 cents last month. They last traded at 62 cents.

Its work programme in Taranaki involves two exploration wells each in the Sidewinder and Cheal permits, one in the Puka permit, continued appraisal of the Cardiff permit and completion of various permit-holding obligations and commercialisation of the Supplejack gas discovery.

(BusinessDesk)

ends

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